From an investment perspective, GSAM researchers are broadly
supportive of utilizing risk assets in 2017.

“We prefer equities over credit and credit over rates, but
we expect low returns from these traditional exposures given 1) elevated
valuations, 2) limited upside for corporate earnings from current levels and 3)
limits to economic growth potential,” the analysis projects. “Broadening
exposure beyond conventional stocks and bonds, identifying opportunities in
emerging markets and deploying more dynamic asset allocation strategies are
some ways to adapt.”

The analysis goes on to propose several key questions institutional
investors should consider in shaping their approach to markets next year.

“Is it time to de-risk?” they ask. “No. We think de-risking
would be premature, at least from a purely return-generating standpoint. We
expect the macro environment to remain supportive of risk assets during 2017
amid a slow-but-steady expansion in developed markets and an acceleration of growth
in some emerging markets … We believe the concerns about the developed world
being mired in a pattern of underinvestment and stalled growth—so-called
secular stagnation—are overdone.”

According to GSAM, the transition to populism in key markets
will be an evolving theme in 2017, and one that all sorts of investors should watch carefully.

“We will be closely monitoring the strength of the populist
trend given its potential to impact Europe even further and the increased
likelihood of more protectionist trade policies,” GSAM notes. “The first 100
days of the Trump administration will be critical for assessing policy details
and priorities, from tax rates to trade agreements.”

Natixis Global Asset Management is another firm to have
recently released a preliminary 2017 investment outlook, this one based on a survey of 500 institutional
investors who manage corporate pensions and DC plans, public pensions,
sovereign wealth funds, insurance funds as well as endowments and foundations.

Similar to the GSAM findings, Natixis researchers project emerging
markets stocks, private equity and high-yield bonds will do well in 2017. On
the other hand, investors are skeptical about U.S. stocks, real estate and
government bonds, according to Natixis.

“Geopolitical risk ranks Number 1 in investor concerns,”
Natixis researchers suggest. “Investors say the biggest causes of market
volatility will be geopolitical
events, such as Brexit.”

At a high level, Natixis finds institutional investors plan
to shift more toward alternative investments in 2017, raising their allocations
to 22% from 18%. They will raise stock allocations slightly and cut bond
holdings. Interestingly, institutional investors actually project they will use
passive investments less in 2017 than they previously believed—though this remains an evolving
area.

Among other investment industry service providers to share
outlook data with PLANADVISER was NerdWallet—focused more on the service of
individual investors. Not surprisingly, the firm finds financial anxiety ran high in 2016 and will likely do the same next year.

“Three out of four Americans had some type of financial
worry,” the firm reports. “The top financial concerns are health care bills and
expenses (35%), lack of emergency savings (35%), lack of retirement savings
(28%) and credit card debt (27%). Further, Americans report low confidence in
their retirement savings.”

While retirement was the most commonly cited savings
priority (28%), only 29% of Americans report that they feel confident that they
saved enough in 2016. There is little sign that anything like a dramatic
improvement in this figure should be expected in the years ahead.

“Of those who have a workplace retirement account, only 15%
planned to max out their retirement plan for 2016,” NerdWallet reports. “Only a
fifth (21%) of Americans who are saving for retirement have plans to max out
their IRA for this year … 30% of Americans report that they are currently not
saving for retirement at all, including 43% of millennials ages 18 to 34 … 2017
doesn’t look any better.”